Finance (No. 2) Bill (HC Bill 190)

(4C) In subsection (4B), “listed” and “recognised growth market” are to be
construed in accordance with section 99A.”

3 After that section insert—

“99A Section 99(4B): “listed” and “recognised growth market”

(1) 5This section applies for the purposes of section 99(4B).

(2) Section 1005(3) to (5) of the Income Tax Act 2007 (meaning of “listed”
etc) applies as it applies in relation to the Income Tax Acts.

(3) “Recognised growth market” means a market recognised as a growth
market by the Commissioners for Her Majesty’s Revenue and
10Customs.

(4) On an application made by a market, the market is to be recognised
by the Commissioners as a growth market if, and only if, the
Commissioners are satisfied, on the basis of evidence provided by
the market, that the market qualifies for recognition.

(5) 15A market qualifies for recognition at any time (“the relevant time”) if
it is a recognised stock exchange which meets one or both of the
following conditions—

(a) a majority of the companies whose stock or marketable
securities are admitted to trading on the market are
20companies with market capitalisations of less than £170
million;

(b) the Commissioners are satisfied that the admission
requirements of the market include provision requiring
companies to demonstrate compounded annual growth in
25gross revenue or employment of at least 20% over the last
three periods of account preceding admission (“the pre-
admission periods”).

(6) In subsection (5)—

• “period of account” of a company means a period for which the
  30company draws up accounts;

• “recognised stock exchange” has the meaning given by section
  1005(1) of the Income Tax Act 2007.

(7) For the purposes of subsection (5)(a) a company’s market
capitalisation at the relevant time is the average of the closing market
35capitalisations of the company on the last trading day of each
calendar month (or part of a calendar month) in the qualifying
period.

(8) “The qualifying period” means whichever is the shorter of—

(a) the last three calendar years preceding the relevant time, or

(b) 40the period beginning with the day on which the company is
admitted to trading on the market and ending at the end of
the last calendar year preceding the relevant time.

(9) For the purposes of subsection (5)(a), a company is to be disregarded
if it is admitted to trading on the market in the calendar year in which
45the relevant time falls.

(10) In the case of a company with a market capitalisation in a currency
other than sterling, the closing market capitalisation for the last
trading day of any calendar month is to be taken, for the purposes of
subsection (7), to be the sterling equivalent of that capitalisation
5(calculated by reference to the spot rate of exchange for that last
trading day).

(11) For the purposes of subsection (5)(b), the percentage of the
compounded annual growth in gross revenue over the pre-
admission periods is calculated by applying the formula—

10

where—

• “EV” is the company’s gross revenue for the last of the pre-
  admission periods,

• “BV” is the company’s gross revenue for the period of
  15account immediately preceding the pre-admission periods.

(12) For those purposes, the percentage of the compounded annual
growth in employment over the pre-admission periods is calculated
by applying the formula—

20where—

• “EV” is the number of employees of the company at the end
  of the last of the pre-admission periods,

• “BV” is the number of employees of the company at the end
  of the period of account immediately preceding the pre-
  25admission periods.

(13) The Treasury may by regulations—

(a) make provision for the revocation by the Commissioners of a
recognition under this section and about the consequences of
a revocation;

(b) 30amend this section so as to add, remove or alter a condition
which must be met in relation to a market for it to be
recognised by the Commissioners under this section.

(14) Regulations under this section may contain incidental,
supplemental, consequential and transitional provision and savings.

(15) 35The power to make regulations under this section is exercisable by
statutory instrument, and any statutory instrument containing such
regulations is subject to annulment in pursuance of a resolution of
the House of Commons.

(16) This section is to be construed as one with the Stamp Act 1891.”

40Commencement of Part 1 and transitional provision

4 (1) The amendment made by paragraph 2 has effect in relation to any
agreement to transfer securities—

(a) where the agreement is conditional, if the condition is satisfied on or
after 28 April 2014, and

(b) in any other case, if the agreement is made on or after that date.

(2) Subject to sub-paragraph (3), the amendment made by paragraph 3 is treated
as having come into force on 28 April 2014.

(3) The following provisions of section 99A of FA 1986 (inserted by paragraph
53) come into force on the day on which this Act is passed—

(a) paragraph (b) of subsection (13), and

(b) subsections (14) and (15) so far as relating to that paragraph.

(4) Where, having been satisfied as mentioned in subsection (4) of section 99A
of FA 1986, the Commissioners for Her Majesty’s Revenue and Customs
10have recognised a market as a growth market in anticipation of the coming
into force of that section, that recognition has effect on and after 28 April
2014 as if it were a recognition under that section.

Part 2 Stamp duty

15Main charge

5 Stamp duty is not chargeable under Schedule 13 to FA 1999 (transfers on
sale) on instruments relating to stock or marketable securities admitted to
trading on a recognised growth market but not listed on any market.

Charge in relation to the purchase by a company of its own shares

6 20Stamp duty is not chargeable by virtue of section 66(2) of FA 1986 (return
relating to company’s purchase of own shares treated as instrument of
transfer on sale) on returns relating to shares admitted to trading on a
recognised growth market but not listed on any market.

Charge in relation to property vested by Act or purchased under statutory power

7 25Section 12 of FA 1895 (collection of stamp duty in cases of property vested
by Act or purchased under statutory powers) does not apply to stock or
marketable securities admitted to trading on a recognised growth market
but not listed on any market.

Interpretation of paragraphs 5 to 7

8 30In paragraphs 5 to 7 “listed” and “recognised growth market” are to be
construed in accordance with section 99A of FA 1986 (inserted by paragraph
3 of this Schedule).

Depositary receipts: charge

9 In section 67 of FA 1986 (depositary receipts), after subsection (8) insert—

“(8A) 35Where an instrument transfers shares or stock or marketable
securities admitted to trading on a recognised growth market but not
listed on any market, subsections (2) to (5) do not apply and stamp
duty is not chargeable on the instrument.

(8B) In subsection (8A) “listed” and “recognised growth market” are to be
construed in accordance with section 99A below.”

Clearance services: charge

10 In section 70 of that Act (clearance services), after subsection (8) insert—

“(8A) 5Where an instrument transfers shares or stock or marketable
securities admitted to trading on a recognised growth market but not
listed on any market, subsections (2) to (5) do not apply and stamp
duty is not chargeable on the instrument.

(8B) In subsection (8A) “listed” and “recognised growth market” are to be
10construed in accordance with section 99A below.”

Charge on transfers of partnership interests

11 (1) Schedule 15 to FA 2003 (SDLT: partnerships) is amended as follows.

(2) In paragraph 31(1) (stamp duty on transfers of partnership interests:
continued application), after “that section)” insert “or in Schedule 20 to the
15Finance Act 2014 (abolition of stamp duty in relation to certain securities)”.

(3) In paragraph 33—

(a) in sub-paragraph (1A), for “stock or marketable” substitute
“relevant”,

(b) in sub-paragraph (3), for “stock or marketable” substitute “relevant”,

(c) 20in that sub-paragraph omit “that stock and” (in both places),

(d) in sub-paragraph (6), for “stock or” (in each place) substitute
“relevant”,

(e) in sub-paragraph (7), for “stock or” (in both places) substitute
“relevant”, and

(f) 25after sub-paragraph (8) insert—

“(8A) In this paragraph “relevant securities” means stock or
marketable securities other than any stock or marketable
securities admitted to trading on a recognised growth
market but not listed on any market.”

30Commencement of Part 2

12 (1) Paragraph 6 has effect in relation to any purchase of shares by a company on
or after 28 April 2014.

(2) Paragraph 7 has effect in relation to—

(a) any Act passed on or after 28 April 2014, and

(b) 35any instrument of transfer pursuant to such an Act executed on or
after that date.

(3) Paragraph 8 is treated as having come into force on 28 April 2014.

(4) Subject to that, this Part of this Schedule has effect in relation to—

(a) any instrument which is executed on or after 28 April 2014 in
pursuance of—

(i) an agreement made on or after that date, or

(ii) a conditional agreement made before that date where the
5condition is satisfied on or after that date, and

(b) any instrument which is not executed in pursuance of a contract and
is executed on or after that date.

Section 110

SCHEDULE 21 Inheritance tax

10Introductory

1 IHTA 1984 is amended as follows.

Rate bands for tax years 2015-16, 2016-17 and 2017-18

2 Section 8 (indexation) does not have effect by virtue of any difference
between the consumer prices index for the month of September in 2014, 2015
15or 2016 and the previous September.

Treatment of certain liabilities

3 (1) After section 162A (liabilities attributable to financing excluded property)
insert—

“162AA Liabilities attributable to financing non-residents’ foreign currency
20accounts

(1) This section applies if—

(a) in determining the value of a person’s estate immediately
before death, a balance on any qualifying foreign currency
account (“the relevant balance”) is to be left out of account
25under section 157 (non-residents’ bank accounts), and

(b) the person has a liability which is attributable, in whole or in
part, to financing (directly or indirectly) the relevant balance.

(2) To the extent that the liability is attributable as mentioned in
subsection (1)(b), it may only be taken into account in determining
30the value of the person’s estate immediately before death so far as
permitted by subsection (3).

(3) If the amount of the liability that is attributable as mentioned in
subsection (1)(b) exceeds the value of the relevant balance, the excess
may be taken into account, but only so far as the excess does not arise
35for either of the reasons mentioned in subsection (4).

(4) The reasons are—

(a) arrangements the main purpose, or one of the main purposes,
of which is to secure a tax advantage, or

(b) an increase in the amount of the liability (whether due to the
40accrual of interest or otherwise).

(5) In subsection (4)(a)—

• “arrangements” includes any scheme, transaction or series of
  transactions, agreement or understanding, whether or not
  legally enforceable, and any associated operations;

• 5“tax advantage” means—

  (a)

  the avoidance or reduction of a charge to tax, or

  (b)

  the avoidance of a possible determination in respect
  of tax.”

(2) Section 162C (sections 162A and 162B: supplementary provision) is
10amended as follows.

(3) In the heading, after “162A” insert “, 162AA”.

(4) In subsection (1), after “162A(1) or (5)” insert “, 162AA(1)”.

(5) After subsection (1) insert—

“(1A) In a case in which the value of a person’s estate immediately before
15death is to be determined, where a liability was discharged in part
before that time—

(a) any part of the liability that, at the time of discharge, was not
attributable as mentioned in subsection (1) is, so far as
possible, to be taken to have been discharged first,

(b) 20any part of the liability that, at the time of discharge, was
attributable as mentioned in section 162B(1)(b), (3)(b) or (5)(c)
is, so far as possible, only to be taken to have been discharged
after any part of the liability within paragraph (a) was
discharged,

(c) 25any part of the liability that, at the time of discharge, was
attributable as mentioned in section 162AA(1) is, so far as
possible, only to be taken to have been discharged after any
parts of the liability within paragraph (a) or (b) were
discharged, and

(d) 30any part of the liability that, at the time of discharge, was
attributable as mentioned in section 162A(1) or (5) is, so far as
possible, only to be taken to have been discharged after any
parts of the liability within paragraphs (a) to (c) were
discharged.”

(6) 35In subsection (2)—

(a) for “Where” substitute “In any other case, where”, and

(b) in paragraph (a), for “subsection (1)” substitute “section 162A(1) or
(5) or 162B(1)(b), (3)(b) or (5)(c)”.

(7) In section 175A (discharge of liabilities after death), in subsection (7)—

(a) 40after paragraph (a) insert—

“(aa) any part of the liability that is attributable as
mentioned in section 162AA(1) is, so far as possible,
taken to be discharged only after any part of the
liability within paragraph (a) is discharged,”,

(b) 45in paragraph (b)—

(i) for “part”, in the second place it appears, substitute “parts”,
and

(ii) for “(a) is” substitute “(a) or (aa) are”,

(c) in paragraph (c)—

(i) for “paragraph (a) or (b)” substitute “any of paragraphs (a) to
(b)”, and

(ii) for “either” substitute “any”.

(8) 5The amendments made by this paragraph have effect in relation to transfers
of value made, or treated as made, on or after the day on which this Act is
passed.

Ten-year anniversary charge

4 (1) In section 64 (charge at ten-year anniversary), after subsection (1) insert—

“(1A) 10For the purposes of subsection (1) above, property held by the
trustees of a settlement immediately before a ten-year anniversary is
to be regarded as relevant property comprised in the settlement at
that time if—

(a) it is income of the settlement,

(b) 15the income arose before the start of the five years ending
immediately before the ten-year anniversary,

(c) the income arose (directly or indirectly) from property
comprised in the settlement that, when the income arose, was
relevant property, and

(d) 20when the income arose, no person was beneficially entitled to
an interest in possession in the property from which the
income arose.

(1B) Where the settlor of a settlement was not domiciled in the United
Kingdom at the time the settlement was made, income of the
25settlement is not to be regarded as relevant property comprised in
the settlement as a result of subsection (1A) above so far as the
income—

(a) is situated outside the United Kingdom, or

(b) is represented by a holding in an authorised unit trust or a
30share in an open-ended investment company.

(1C) Income of the settlement is not to be regarded as relevant property
comprised in the settlement as a result of subsection (1A) above so
far as the income—

(a) is represented by securities issued by the Treasury subject to
35a condition of the kind mentioned in subsection (2) of section
6 above, and

(b) it is shown that all known persons for whose benefit the
settled property or income from it has been or might be
applied, or who are or might become beneficially entitled to
40an interest in possession in it, are persons of a description
specified in the condition in question.”

(2) In section 66 (rate of ten-yearly charge), after subsection (2) insert—

“(2A) Subsection (2) above does not apply to property which is regarded as
relevant property as a result of section 64(1A) (and accordingly that
45property is charged to tax at the rate given by subsection (1) above).”

(3) The amendments made by this paragraph have effect in relation to occasions
on which tax falls to be charged under section 64 of IHTA 1984 on or after 6
April 2014.

Delivery of account and payment of tax

5 (1) 5In section 216(6) (time for delivery of accounts), before paragraph (b)
insert—

“(ad) in the case of an account to be delivered by a person within
subsection (1)(c) above, before the expiration of the period of
six months from the end of the month in which the occasion
10concerned occurs;”.

(2) In section 226 (payment of tax: general rules), after subsection (3B) insert—

“(3C) Tax chargeable under Chapter 3 of Part 3 of this Act on the value
transferred by a chargeable transfer, other than any for which the
due date is given by subsection (3B) above, is due six months after
15the end of the month in which the chargeable transfer is made.”

(3) In section 233 (interest on unpaid tax)—

(a) in subsection (1)(a), after “transfer” insert “not within paragraph (aa)
below and”,

(b) after subsection (1)(a) insert—

“(aa) 20an amount of tax charged under Chapter 3 of Part 3 of
this Act on the value transferred by a chargeable
transfer remains unpaid after the end of the period of
six months beginning with the end of the month in
which the chargeable transfer was made, or”, and

(c) 25in subsection (1)(b), for “any other chargeable transfer” substitute “a
chargeable transfer not within paragraph (a) or (aa) above”.

(4) The amendments made by this paragraph have effect in relation to
chargeable transfers made on or after 6 April 2014.

Section 113

SCHEDULE 22 30The bank levy: miscellaneous changes

Introduction

1 Schedule 19 to FA 2011 (the bank levy) is amended in accordance with this
Schedule.

High quality liquid assets etc

2 35In paragraph 15 (chargeable equity and liabilities of a UK banking group or
a building society group)—

(a) in sub-paragraph (2)(c), for “finally,” substitute “finally (subject to
sub-paragraph (6))”, and

(b) for sub-paragraph (6) substitute—

“(6) 40Where any amount (“A”) within sub-paragraph (2)(c) is
used to reduce short term liabilities, the amount of the

reduction is determined as if A were an amount equal to
half of A.”

3 In paragraph 17 (chargeable equity and liabilities of foreign banking
groups)—

(a) in sub-paragraph (6)(c), for “finally,” substitute “finally (subject to
5sub-paragraph (16))”,

(b) in sub-paragraph (12)(c), for “finally,” substitute “finally (subject to
sub-paragraph (16))”, and

(c) for sub-paragraph (16) substitute—

“(16) Where any amount (“A”) within sub-paragraph (6)(c) or
10(12)(c) is used to reduce short term liabilities, the amount
of the reduction is determined as if A were an amount
equal to half of A.”

4 In paragraph 19 (chargeable equity and liabilities of a non-banking group)—

(a) in sub-paragraph (6)(c), for “finally,” substitute “finally (subject to
15sub-paragraph (16))”,

(b) in sub-paragraph (12)(c), for “finally,” substitute “finally (subject to
sub-paragraph (16))”, and

(c) for sub-paragraph (16) substitute—

“(16) Where an amount (“A”) within sub-paragraph (6)(c) or
20(12)(c) is used to reduce short term liabilities, the amount
of the reduction is determined as if A were an amount
equal to half of A.”

5 In paragraph 21 (chargeable equity and liabilities of a UK banking group or
a building society group)—

(a) 25in sub-paragraph (2)(c), for “finally,” substitute “finally (subject to
sub-paragraph (6))”, and

(b) for sub-paragraph (6) substitute—

“(6) Where an amount (“A”) within sub-paragraph (2)(c) is
used to reduce short term liabilities, the amount of the
30reduction is determined as if A were an amount equal to
half of A.”

6 In paragraph 27 (chargeable equity and liabilities of a UK banking group or
a building society group)—

(a) in sub-paragraph (2)(c), for “finally,” substitute “finally (subject to
35sub-paragraph (6))”, and

(b) for sub-paragraph (6) substitute—

“(6) Where an amount (“A”) within sub-paragraph (2)(c) is
used to reduce short term liabilities, the amount of the
reduction is determined as if A were an amount equal to
40half of A.”

7 The amendments made by paragraphs 2 to 6 have effect in relation to
chargeable periods ending on or after 1 January 2015.

Protected deposits

8 (1) Paragraph 29 (“excluded” equity and liabilities: protected deposits) is
amended as follows.

(2) Omit sub-paragraphs (4) to (6).

(3) 5In sub-paragraph (8) omit “, and sub-paragraphs (4), (5) and (6) so far as
relating to a scheme within sub-paragraph (2),”.

(4) In sub-paragraph (9) omit “, and sub-paragraphs (4), (5) and (6) so far as
relating to a scheme within sub-paragraph (3),”.

(5) The amendments made by this paragraph have effect for chargeable periods
10ending on or after 1 January 2015.

Tier one capital equity and liabilities

9 (1) Paragraph 30 (“excluded” equity and liabilities: tier one capital equity and
liabilities) is amended as follows.

(2) For sub-paragraph (2) substitute—

“(2) 15Tier one capital equity and liabilities” means, in relation to an
entity or group of entities, so much of the entity or group’s equity
and liabilities as is tier one capital within the meaning of Article 25
of the Capital Requirements Regulation (taking account of the
transitional provisions in Part Ten of that Regulation).

(3) 20For the purposes of sub-paragraph (2), the Capital Requirements
Regulation is to be treated as applying, in relation to all entities
and groups of entities, as if—

(a) to the extent it would not otherwise be the case, the
Prudential Regulation Authority were the competent
25authority in relation to those entities and groups,

(b) the only determinations made, and discretions exercised,
by the Prudential Regulation Authority for the purposes of
the Capital Requirement Regulation were those published
by it in accordance with that Regulation, and

(c) 30those entities and groups (to the extent that it would not
otherwise be the case) were subject to the provisions of the
PRA Handbook immediately before 1 January 2014.

(4) “The Capital Requirements Regulation” means Regulation (EU)
No 575/2013 of the European Parliament and of the Council of 26
35June 2013 on prudential requirements for credit institutions and
investment firms.”

(3) The amendment made by this paragraph has effect in relation to chargeable
periods ending on or after 1 January 2014.

Liabilities representing QCP margin in relation to trades executed under clearing agreements

10 (1) 40After paragraph 38 insert—

“38A (1) Liabilities are excluded if they represent cash collateral provided
as QCP margin in relation to a trade executed or to be executed
under a client clearing agreement.